The Week Ahead: Bellway in spotlight as house price falls bite

The market will renew its focus on the housing market when Bellway posts its full-year figures this week.

Recent reports of falling house prices have dampened the mood around builders as sector watchers attempt to gauge the outlook. Shares have been weighed down by concerns about the impact of this week's Comprehensive Spending Review and sluggish economic growth. The other week, for instance, Deutsche Bank analysts, building on feedback from industry sources, said the hoped-for seasonal pick-up in home sales in September had not materialised. Indeed, the broker's enquiries suggested that weekly sales rates during the month were only marginally up in annual terms and flat since July.

Given this backdrop, news about Bellway's current trading position, and its predictions for the future, is likely to come in for some close scrutiny this week. "Bellway reported a strong pre-close statement in our opinion, but since then house prices have edged off and the market feels a little more uncertain," Panmure Gordon's analysts said in a note last week. "Our forecasts are slightly below consensus due to the fact we have factored in a weak fourth quarter... for some time and we have marginally lower volume growth factored in versus consensus."


UBS is anticipating news of a resumption of growth in lager sales volumes when the drinks group SABMiller issues a second-quarter update this morning. The broker is forecasting in year-on-year growth of 2 per cent – a reversal of the 1 per cent decline seen in the first quarter. "While momentum is improving, we believe it is still below SAB's medium term trends," UBS said.

Results/Updates: SABMiller.


Nomura is looking for confirmation of positive trading when the Premier Inn owner Whitbread issues half-yearly results. The broker said that while market expectations had been climbing (consensus estimates are up 10 per cent in the past month), it believed they remained prudent for both 2011 and 2012. In terms of this week's numbers, the broker said it was looking for £152m in first-half earnings before interest tax, which implies 16 per cent growth year-on-year. It expects the company, which notched up a series of impressive performances throughout the recession, to strike a "quietly confident" tone for the future.

Results/Updates: Bluebay Asset Management, Bunzl, National Express, Xstrata, Senior, Whitbread and Bellway.


Home Retail Group, owner of Argos and Homebase, will post half-year figures and, with the Government's Comprehensive Spending Review on the same day, the company will no doubt be asked if it is changing its view about the consumer outlook. Having said that, Numis does not expect any significant changes to its forecasts, as the company scaled back its guidance for full-year profit last month. UBS said the company's strong and stable cash flows meant that both the interim and final dividends were likely to be held.

Also on Wednesday, Panmure is expecting to hear of £5m in adjusted pre-tax profits when the car retailer Vertu Motors issues its half-year numbers. That would be an improvement on its £4.2m profit last year, and would imply 20 per cent growth in revenues and a 10 basis point reduction in underlying operating margins.

"Despite a busy year of acquisition activity, we expect the finances of the company to remain strong with net cash balances anticipated to be £11.2m, backed with freeholds and long leaseholds amounting to in excess of £65m," Panmure said. It expects its estimates for the full-year to be "well underpinned" by this week's update.

Results/Updates: Uniq, Vertu Motors, Hochschild Mining, Home Retail Group.


Deutsche Bank is anticipating a "dull" statement when the pharmaceuticals group GlaxoSmithKline issues its third-quarter results. "The third quarter will be the only quarter for GSK this year which does not bear the heavy imprint of pandemic flu related sales," the broker said last week.

It noted that both GSK's first and the second quarters benefited from a windfall in flu-related revenues, while the fourth quarter was likely to face tough comparatives in the face of what was a "heavily flu-inflated" final quarter last year.

Also on Thursday, UBS is looking forward to a positive update from the car retailer Inchcape, which is due to post an interim management statement. The broker expects to hear of improvements in the company's underlying markets, which it said should help Inchcape to beat consensus expectations. For the full year, UBS has pencilled in earnings of 28.8p per share, putting itself 2 per cent ahead of market hopes.

Results/Updates: Debenhams, Smiths News, Luminar, Anglo American, Henderson, Inchcape, Britvic and GlaxoSmithKline.


Results/Updates: British Sky Broadcasting and Provident Financial.


BRC-KPMG London retail sales monitor.


CBI quarterly industrial trends; Bank of England Governor Mervyn King address Black Country Chamber of Commerce, Dudley; US housing starts.


Chancellor George Osborne to set out the Government's Comprehensive Spending Review; Bank of England MPC meeting minutes; Bank of England agents' summary of business conditions; CML mortgage lending figures; Scottish retail sales monitor.


Bank of England trends in lending report; Monthly auto production figures; Monthly retail sales figures.

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